VW's new division takes aim at Uber-style competition

Reuters Staff

4 Min Read

A Volkswagen logo is pictured at the newly opened Volkswagen factory in Wrzesnia, Poland, September 9, 2016. REUTERS/Kacper Pempel/File Photo

LONDON (Reuters) - Volkswagen (VOWG_p.DE) launched a new digital business division on Monday to take on services such as Uber UBER.UL, shifting its focus beyond selling cars to catering for customers who prefer to pay for use rather than own a vehicle.

VW will offer on-demand shuttle services next year through the new division, to be called MOIA. That takes Europe’s largest carmaker deeper into digital mobility services after investing in ride-hailing business Gett earlier this year.

“Mid- and long-term MOIA will create the kinds of services that will meet the needs of urban citizens,” Ole Harms, head of the new division said on Monday.

VW, seeking to recover from its diesel emissions scandal, expects to earn a substantial share of revenues by 2025 from the new services business as it revamps its core brand while investing billions of euros in electric vehicles, ride-hailing and self-driving cars.

The business prospects are huge, consultants A.T. Kearney said in a study published in October. The global market for self-driving vehicles and related services may surge to $282 billion by 2030 from $51 billion in 2020, the firm said.

VW has been slow to embrace electric cars and has long ignored alternatives to ownership, while German rivals Daimler (DAIGn.DE) and BMW (BMWG.DE) have for years been running their own car-sharing operations.

BMW plans to test self-driving cars in Munich as a way to advance a new ride-hailing business model without needing drivers, the company said on Monday. [L5N1DZ0SM]

VW made it clear it wants to make up for lost time as it used a London startup conference to launch MOIA.

“Even though not everyone will still own a car in future, MOIA can help make everyone a customer of our company in some way or another,” Chief Executive Matthias Mueller said.

Mueller said last month that Volkswagen has been in talks with Uber on potential cooperation but the carmaker would not settle for the role as a mere supplier.

The German company wants to become a leader in the new services in Europe over the next one to two years, Harms told reporters late on Sunday, adding that Berlin-based MOIA’s workforce will quadruple to 200 staff next year.

“We want to bring our services to the market at scale,” Harms told the conference, citing Europe, the United States and China as key markets. “It’s a build-and-buy strategy.”

In an interview with Reuters, Harms said MOIA has a reasonable, three-digit million-euro amount of capital to invest, putting it in the same league as leading European early-stage investors such as Index, Atomico and Accel.

While MOIA’s corporate funding will be used to invest in early-stage companies, the eventual plan is for VW’s new business to bring in external investors at a later stage, Harms said.

“We are in quite advanced talks with companies,” said 41-year-old Harms who has been with VW since 2008. In the mid-term future, the teams and companies MOIA could engage with must have a profitable business model, he said.

VW’s rivals including Toyota (7203.T) and General Motors (GM.N) have also taken stakes in mobility companies as carmakers and technology firms such as Google (GOOGL.O) and Apple (AAPL.O) vie to serve consumers in the vast digital market.